The rules of the business game are about to change, so those CEOs who haven’t already done so had better crank up their calculators, pull out their wall charts, and call their congressmen. The dramatic political events in
Many Europeans believe Americans talk a lot about free trade-and complain a lot about how Europe and Japan should open up their markets and stop subsidizing domestic industry-but then never look into the mirror. They’re right. The
And they’re right.
The EC is currently the world’s largest commercial and trading unit, with an annual GDP of more than $4 trillion.
Imports topped $720 billion last year, much of that from the
Considering how much is at stake,
At the moment, EC-92 is an experiment in competitive enterprise that, provided it is successful and receives the support of a free-market-minded
WE’RE OKAY, EURO-KAY
Reduction of trade barriers within the EC is expected to lead to a rise in European incomes and thus enormous opportunities for
The EC is already
European money and capital markets are also major sources of
Exactly how this will change in the next two years is the topic of serious speculation in the higher echelons of world finance. There is, however, considerable agreement that the current
Considering the scope of European investment in the
In this new common market, trade barriers between member states, such as tariffs and quotas, will be removed and common tariffs toward nonmember countries established. The common market will also allow the free movement of labor, capital, and other factors of production between member countries. This arrangement differs from a free trade area primarily in the fact that, under a free trade agreement, such as that between the
EUROPE, OPEN EUROPE
However, the EC-92 plan does not address some of the economic and industrial policies that have contributed to relatively slow growth and job creation in
The prospect of 1992 has already affected corporate decision making in EC countries significantly. European firms are modernizing, feeling that the changes scheduled for 1992 will enable them to better compete against major American and Japanese firms. European corporations are also in a frenzy of mergers, acquisitions, and joint ventures in anticipation of the increased competitive challenges of EC-92.
The opening up of markets and the diversion of assets to
There has already been a significant diversion of European, American, and Japanese investment funds-that may otherwise have gone into the EC-into
The desire for higher economic productivity, more consumer choice, lower prices, and greater access to foreign markets in part has motivated
Edwin J. Feulner, Ph.D. is president of The Heritage Foundation, a Washington, D.C.-based public policy research institution. He also serves on the board of several other foundations and research institutes. Dr. Feulner is the author of Conservatives Stalk The House.